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TMI Blog2017 (7) TMI 1258X X X X Extracts X X X X X X X X Extracts X X X X ..... er. Even where bank collects cheques, dividends, bills, promissory notes and the like for credit to customer's account, the bank is acting as the agent of the customer. The relationship of the banker and the customer is not necessarily different as between current account and fixed deposits. Since the assessee can draw the fixed deposit amount on maturity, the interest receivable on maturity shall be treated as “received”, though it was not drawn. The interest credited to the assessee’s account during the financial year 2009-10 by various Banks/institution, with respect to which TDS was deducted and therefore, the same has to be assessed as income in the hands of the assessee - decided against assessee. - I.T.A.No.1034/Mds/2016 Assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/-. When asked, the AR of the assessee has produced bonds and debentures. The Assessing Officer has noticed that the assessee has invested in Kisan Vikas Patra, IRFC tax free deposits, post office deposits, NABARD deposits, fixed deposits in Dena Bank, SBI, RBI deposit, National Housing Bank Suvidha deposits. On perusal of the profit and loss account and the credit available in AS26, it was noticed that the assessee has offered following interest income: S.No. Deposits with Interest received Interest admitted in P L A/c. Balance 1. State Bank of India 5,72,556 2,54,138 3,18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appeal before the Tribunal. By reiterating the submissions as made before the authorities below, the ld. Counsel for the assessee has pleaded that the addition made by the Assessing Officer should be deleted since the assessee has been adopting cash system of accounting and though interest income was accrued but actually the assessee has not received. 5. On the other hand, the ld. DR has strongly supported the orders of authorities below. 6. We have heard both sides, perused the materials available on record and gone through the orders of authorities below. In this case, against the total interest receipt of ₹.11,97,092/-, in the profit and loss account, the assessee has admitted only ₹.3,69,252/- and the balance intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as the agent of the customer. This is the essence of banking business. The relationship of the banker and the customer is not necessarily different as between current account and fixed deposits. Since he can draw the fixed deposit amount on maturity, interest receivable on maturity is treated as received, though it is not drawn. The Central Board of Direct Taxes in Circular No. 243 dated June 22, 1978 stated that even in case of reinvestment deposit schemes, recurring deposits and cash certificates, it is possible to treat the income as taxable on annual basis on the ground that the banks provide for interest on such deposits in their own accounts, though it had not become due and payable except as provided under the terms of the depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is upheld. It is an admitted fact that the interest towards investment in various deposits has been credited to the account of the assessee and therefore, it has to be treated as receipt. A credit in one's bank account amounts to receipt by the account holder. Cash system of accounting does not mean that it should be cash received by the assessee. A credit to bank account is equally a receipt. It is true that if such interest is credited in the accounts of any third party, such interest cannot be taken as receipt. But interest from the bank is different, because the bank holds money on behalf of the account holder. Even where bank collects cheques, dividends, bills, promissory notes and the like for credit to customer's account, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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